our business to the extent that it can delay tenant business decisions or influence tenant decisions regarding expansion. Rental demand for the Properties in Operation remained relatively flat for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011. During the three months ended September 30, 2012, the Company successfully leased 3.8 million square feet and, as of that date, attained occupancy of 91.9% for the Wholly Owned Properties in Operation and 91.4% for the JV Properties in Operation for a combined occupancy of 91.8% for the Properties in Operation. During the three months ended September 30, 2012, straight line rents on renewal and replacement leases were on average 8.6% lower than rents on expiring leases. At December 31, 2011, occupancy for the Wholly Owned Properties in Operation was 91.9% and for the JV Properties in Operation was 88.7% for a combined occupancy for the Properties in Operation of 91.3%.
Consistent with its strategy, the Company has been an active seller of suburban office properties and it has acquired or commenced development of industrial and metro-office properties. The Company anticipates that the foregoing activity will result in a decline in net cash provided by operating activities until sufficient acquisition properties are acquired and stabilized and the development properties are completed and leased. Although the Company anticipates that its investment focus for the remainder of 2012 will be more on acquisitions than dispositions, the Company anticipates that, for 2012 in the aggregate, the net cash provided by operating activities, less customary capital expenditures and leasing transaction costs, will be approximately $5 million less than dividend distributions. Additionally, to the extent that the Company is replacing the income previously provided by the suburban office properties with industrial properties, the Company must acquire a substantial volume of the industrial properties because they yield a lower rent per square foot than office properties. The market for industrial properties of the type the Company seeks to acquire is very competitive. The Company will continue to evaluate these circumstances in light of its dividend distribution policy.
WHOLLY OWNED CAPITAL ACTIVITY
Acquisitions
During the three months ended September 30, 2012, the Company acquired one property for a Total Investment of $9.9 million. This property, which contains 232,000 square feet of leasable space, was 17.6% leased as of September 30, 2012. During the nine months ended September 30, 2012, the Company acquired five properties for a Total Investment of $43.1 million. These properties, which contain 835,000 square feet of leasable space, were 46.8% leased as of September 30, 2012. For 2012, the Company anticipates that wholly owned property acquisitions will range from $100 million to $300 million and believes that certain of its acquired properties will be either vacant or partially leased.

Dispositions
Disposition activity allows the Company to, among other things, (1) reduce its holdings in certain markets and product types within a market consistent with the Company's strategy; (2) lower the average age of the portfolio; (3) optimize the cash proceeds from the sale of certain assets; and (4) obtain funds for investment activities. During the three months ended September 30, 2012, the Company realized proceeds of $2.7 million from the sale of 49 acres of land. During the nine months ended September 30, 2012, the Company realized proceeds of $220.4 million from the sale of 56 operating properties representing 2.8 million square feet and 107 acres of land. Although the Company originally anticipated that during 2012 wholly owned property dispositions would range from $250 million to $350 million, it is unlikely that it will reach the lower end of this range.
Development
During the three months ended September 30, 2012, the Company brought into service two Wholly Owned Properties under Development representing 282,000 square feet and a Total Investment of $15.7 million. During the nine months ended September 30, 2012, the Company brought into service three Wholly Owned Properties under Development representing 410,000 square feet and a Total Investment of $22.2 million. During the three months ended September 30, 2012, the Company initiated three Wholly Owned Properties under Development with a projected Total Investment of $55.5 million. During the nine months ended September 30, 2012, the Company initiated seven Wholly Owned Properties under Development with a projected Total Investment of $86.4 million. As of September 30, 2012, the Company had 14 Wholly Owned Properties under Development with a projected Total Investment of $349.1 million. For 2012, the Company anticipates that wholly owned development deliveries will total between $30 million and $70 million. Although the Company originally anticipated that during 2012 it would commence development on properties with an expected aggregate Total Investment in a range from $200 million to $300 million, it is unlikely that it will reach the lower end of this range.
"Total Investment" for a property is defined as the property's purchase price plus closing costs (in the case of acquisitions if vacant) and management's estimate, as determined at the time of acquisition, of the cost of necessary building improvements in the case of acquisitions, or land costs and land and building improvement costs in the case of development projects, and, where appropriate, other development costs and carrying costs.

UNCONSOLIDATED JOINT VENTURE CAPITAL ACTIVITY
The Company periodically enters into unconsolidated joint venture relationships in connection with the execution of its real estate operating strategy. Acquisitions
During the three and nine months September 30, 2012, none of the unconsolidated joint ventures in which the Company held an interest acquired any properties. The Company does not anticipate that any unconsolidated joint ventures in which the Company holds an interest will acquire any properties in 2012. Dispositions
During the three and nine months ended September 30, 2012, none of the unconsolidated joint ventures in which the Company held an interest sold any properties. The Company does not anticipate that any unconsolidated joint ventures in which the Company holds an interest will dispose of any properties in 2012.
Development
During the three and nine months ended September 30, 2012, none of the unconsolidated joint ventures in which the Company held an interest brought any properties into service or began any development activities. As of September 30, 2012, the Company has no unconsolidated joint venture properties under development. The Company does not anticipate that any unconsolidated joint ventures in which the Company holds an interest will bring any development properties into service or begin any development activities in 2012.

PROPERTIES IN OPERATION
The composition of the Company's Properties in Operation as of September 30,
2012 and 2011 was as follows (square feet in thousands):

                                                            Straight Line Rent and
                                                              Operating Expense
                                     Net Rent              Reimbursement Per Square
                                Per Square Foot(1)                 Foot(2)                Total Square Feet         Percent Occupied
                                  September 30,                 September 30,               September 30,             September 30,
                                 2012           2011           2012          2011          2012          2011       2012         2011
Wholly Owned Properties in
Operation:
Industrial-Distribution    $     4.49         $  4.38     $       5.84     $  5.70       35,948        34,007       94.3 %       90.7 %
Industrial-Flex            $     8.96         $  9.07     $      13.00     $ 13.09        9,072         9,973       89.3 %       89.0 %
Office                     $    14.75         $ 14.30     $      22.59     $ 22.02       18,648        20,156       88.5 %       90.2 %
                           $     8.00         $  8.21     $      11.55     $ 11.96       63,668        64,136       91.9 %       90.3 %
JV Properties in
Operation:
Industrial-Distribution    $     3.81         $  3.74     $       5.41     $  5.55        9,270         9,269       90.8 %       87.5 %
Industrial-Flex            $    25.78         $ 24.91     $      28.58     $ 25.44          171           171       91.2 %       81.9 %
Office                     $    24.02         $ 24.07     $      34.79     $ 34.57        4,721         4,724       92.5 %       89.9 %
                           $    10.90         $ 10.88     $      15.60     $ 15.64       14,162        14,164       91.4 %       88.3 %
Properties in Operation:
Industrial-Distribution    $     4.35         $  4.25     $       5.76     $  5.67       45,218        43,276       93.6 %       90.0 %
Industrial-Flex            $     9.28         $  9.32     $      13.30     $ 13.28        9,243        10,144       89.4 %       88.9 %
Office                     $    16.69         $ 16.15     $      25.14     $ 24.40       23,369        24,880       89.3 %       90.2 %
                           $     8.53         $  8.69     $      12.29     $ 12.61       77,830        78,300       91.8 %       89.9 %

(1) Net rent represents the contractual rent per square foot at September 30, 2012 or 2011 for tenants in occupancy. Net rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant at September 30, 2012 or 2011 was within a free rent period its rent would equal zero for the purposes of this metric.
(2) Straight line rent and operating expense reimbursement represents the straight line rent including operating expense recoveries per square foot at September 30, 2012 or 2011 for tenants in occupancy.

Geographic segment data for the three and nine months ended September 30, 2012 and 2011 are included in Note 6 to the Company's financial statements. Forward-Looking Statements
When used throughout this report, the words "believes," "anticipates," "estimates" and "expects" and similar expressions are intended to identify forward-looking statements. Such statements indicate that assumptions have been used that are subject to a number of risks and uncertainties that could cause actual financial results or management plans and objectives to differ materially from those projected or expressed herein, including: the effect of global, national and regional economic conditions; rental demand; the Company's ability to identify, and enter into agreements with suitable joint venture partners in situations where it believes such arrangements are advantageous; the Company's ability to identify and secure additional properties and sites, both for itself and the joint ventures to which it is a party, that meet its criteria for acquisition or development; the effect of prevailing market interest rates; risks related to the integration of the operations of entities that we have acquired or may acquire; risks related to litigation; and other risks described from time to time in the Company's filings with the SEC. Given these uncertainties, readers are cautioned not to place undue reliance on such statements.
Critical Accounting Policies and Estimates Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2011 for a discussion of critical accounting policies which include capitalized costs, revenue recognition, allowance for doubtful accounts, impairment of real estate, intangibles and investments in unconsolidated joint ventures. During the nine months ended September 30, 2012, there were no material changes to these policies.

Results of Operations
The following discussion is based on the consolidated financial statements of the Company. It compares the results of operations of the Company for the three and nine months ended September 30, 2012 with the results of operations of the Company for the three and nine months ended September 30, 2011. As a result of the varying levels of development, acquisition and disposition activities by the Company in 2012 and 2011, the overall operating results of the Company during such periods are not directly comparable. However, certain data, including the Same Store comparison, do lend themselves to direct comparison.

This information should be read in conjunction with the accompanying consolidated financial statements and notes included elsewhere in this report. Comparison of Three and Nine Months Ended September 30, 2012 to Three and Nine Months Ended September 30, 2011
Overview
The Company's average gross investment in operating real estate owned for the three months ended September 30, 2012 increased to $5,005.2 million from $4,457.5 million for the three months ended September 30, 2011. For the nine months ended September 30, 2012, the Company's average gross investment in operating real estate owned increased to $4,832.0 million from $4,406.5 million for the nine months ended September 30, 2011.These increases in operating real estate resulted in increases in rental revenue, operating expense reimbursement, rental property expenses, real estate taxes and depreciation and amortization expense. Rental property expense includes utilities, insurance, janitorial, landscaping, snow removal and other costs necessary to maintain a property. Total operating revenue increased to $171.7 million for the three months ended September 30, 2012 from $165.2 million for the three months ended September 30, 2011. The $6.5 million increase was primarily due to an increase in rental income, which was primarily due to the increase in average gross investment in operating real estate. This increase was partially offset by a decrease in termination fees, which totaled $550,000 for the three months ended September 30, 2012 compared to $664,000 for the same period in 2011. Total operating revenue increased to $509.3 million for the nine months ended September 30, 2012 from $494.5 million for the nine months ended September 30, 2011. The $14.8 million increase was primarily due to an increase in rental income, which was primarily due to the increase in average gross investment in operating real estate as well as an increase in termination fees, which totaled $2.8 million for the nine months ended September 30, 2012 as compared to $2.5 million for the same period in 2011.
Most of the increase in investment in operating real estate has been through the acquisition and development of industrial properties and the sale of suburban office properties. Typically, rental rates and reimbursements for operating expenses for industrial real estate are lower as compared to suburban office real estate.
Termination fees are fees that the Company agrees to accept in consideration for permitting certain tenants to terminate their leases prior to the contractual expiration date. Termination fees are included in rental revenue and if a property is sold, related termination fees are included in discontinued operations. See "Other" below.
Segments
The Company evaluates the performance of the Wholly Owned Properties in Operation in terms of net operating income by reportable segment (see Note 6 to the Company's financial statements for a reconciliation of this measure to income from continuing operations). The following table identifies changes to net operating income in reportable segments (dollars in thousands):

                     Three Months Ended        Percentage           Nine Months Ended       Percentage
                       September 30,            Increase              September 30,          Increase
                     2012          2011        (Decrease)          2012          2011       (Decrease)
Northeast
- Southeastern
PA               $   24,880     $  25,602          (2.8 %)      $  74,864     $  76,697         (2.4 %)
- Lehigh/Central
PA                   16,578        15,119           9.7 %          49,331        48,985          0.7 %
- Other               7,640         8,478          (9.9 %)         24,373        26,736         (8.8 %)
Central              15,432        16,650          (7.3 %)         48,723        51,512         (5.4 %)
South                30,870        32,264          (4.3 %)         94,840       100,356         (5.5 %)
Metro                 5,845         4,496          30.0 %  (1 )    17,460        15,497         12.7 %  (1 )
United Kingdom          171            19         800.0 %            (178 )        (265 )      (32.8 %)
Segment-level
net operating
income           $  101,416     $ 102,628          (1.2 %)      $ 309,413     $ 319,518         (3.2 %)

(1) The increase is primarily due to an increase in average gross investment in operating real estate.

Same Store
Property level operating income, exclusive of termination fees, for the Same Store properties decreased to $112.3 million for the three months ended September 30, 2012 compared to $112.6 million for the three months ended September 30, 2011 on a straight line basis (which recognizes rental revenue evenly over the life of the lease), and increased to $111.3 million for the three months ended September 30, 2012 compared to $110.9 million for the three months ended September 30, 2011 on a cash basis. Property level operating income, exclusive of Termination Fees, for the Same Store properties decreased to $338.3 million for the nine months ended September 30, 2012 from $340.5 million for the nine months ended September 30, 2011, on a straight line basis, and decreased to $335.5 million for the nine months ended September 30, 2012 from $335.6 million for the nine months ended September 30, 2011 on a cash basis.
The same store results were affected by decreases in cash and straight line rental rates and a decrease in occupancy in the Company's office properties. Additionally, for the nine months ended September 30, 2012, same store results were also affected by one-time reductions in certain operating expenses that did not recur during the same period in 2012. The following details the Same Store occupancy and rental rates for the respective periods:

                                          Three Months Ended              Nine Months Ended
                                             September 30,                  September 30,
                                          2012            2011           2012            2011
Average occupancy %                         93.0 %          92.1 %          92.8 %         91.4 %
Average rental rate - cash basis (1) $      8.28      $     8.36     $      8.31     $     8.38
Average rental rate - straight line
basis (2)                            $     11.97      $    11.89     $     12.00     $    12.02

(1) Represents the average contractual rent per square foot for the three or nine months ended September 30, 2012 for tenants in occupancy in Same Store properties. Net rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant was within a free rent period its rent would equal zero for purposes of this metric.
(2) Straight line rent and operating expense reimbursement represents the average straight line rent including operating expense recoveries per square foot for the three or nine months ended September 30, 2012 or 2011 for tenants in occupancy. Management generally considers the performance of the Same Store properties to be a useful financial performance measure because the results are directly comparable from period to period. Management further believes that the performance comparison should exclude termination fees since they are more event-specific and are not representative of ordinary performance results. In addition, Same Store property level operating income and Same Store cash basis property level operating income exclusive of termination fees is considered by management to be a more reliable indicator of the portfolio's baseline performance. The Same Store properties consist of the 528 properties totaling approximately 58.2 million square feet owned on January 1, 2011. Acquisitions and completed development during the year ended December 31, 2011 and the nine months ended September 30, 2012 are excluded from the Same Store properties. Acquisitions and completed development are included in Same Store when they have been purchased in the case of acquisitions, and are stabilized in the case of completed development, prior to the beginning of the earliest period presented in the comparison. The 62 properties sold during 2011 and the 56 properties sold during the nine months ended September 30, 2012 are also excluded.

Set forth below is a schedule comparing the property level operating income, on a straight line basis and on a cash basis, for the Same Store properties for the three and nine months ended September 30, 2012 and 2011. Same Store property level operating income and cash basis property level operating income are non-GAAP measures and do not represent income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures because they do not reflect the consolidated operations of the Company. Investors should review Same Store results, along with Funds from operations (see "Liquidity and Capital Resources" below), GAAP net income and cash flow from operating activities, investing activities and financing activities when considering the Company's operating performance. Also set forth below is a reconciliation of Same Store property level operating income and cash basis property level operating income to net income (in thousands).

                                          Three Months Ended                             Nine Months Ended
                               September 30, 2012     September 30, 2011     September 30, 2012     September 30, 2011
Same Store:
Rental revenue                $         114,032      $         114,584      $         341,591      $         343,261
Operating expenses:
Rental property expense                  34,088                 32,343                 94,957                 94,435
Real estate taxes                        18,595                 18,989                 56,542                 57,118
Operating expense recovery              (50,926 )              (49,326 )             (148,233 )             (148,819 )
Unrecovered operating
expenses                                  1,757                  2,006                  3,266                  2,734
Property level operating
income                                  112,275                112,578                338,325                340,527
Less straight line rent                   1,018                  1,675                  2,852                  4,940
Cash basis property level
operating income              $         111,257      $         110,903      $         335,473      $         335,587
Reconciliation of non-GAAP
financial measure - Same
Store:
Cash basis property level
operating income              $         111,257      $         110,903      $         335,473      $         335,587
Straight line rent                        1,018                  1,675                  2,852                  4,940
Property level operating
income                                  112,275                112,578                338,325                340,527
Property level operating
income - properties purchased
or developed subsequent to
January 1, 2011                           3,666                    152                  9,887                    649
Less: Property level
operating income - properties
held for sale at September
30, 2012                                    308                    167                    946                    515
Termination fees                            550                    664                  2,790                  2,543
General and administrative
expense                                 (14,621 )              (13,617 )              (46,444 )              (42,819 )
Depreciation and amortization
. . .